ST fraud cases: Arrest warrants only in case of fake, flying invoices: FBR
According to a sales tax explanatory circular issued by the FBR on Monday, the FBR clarified arrest related provisions of the Sales Tax Act 1990. One of the major demands of the business community was to limit the arrest powers to the issues of fake/ flying invoices.
The FBR has clarified to the business community that the warrant of arrest from judge under subsection (9) of Section 37A of the Sales Tax Act may be obtained primarily in the sales tax frauds which are heinous or material including fake and flying invoices. Under this subsection, the following pre-conditions shall also apply as is the case of arrest under subsection (8) of section 37A:
(i) The accused may tamper with documents.
(ii) The accused may abscond.
(iii) The accused does not help investigations despite three served notices.
In addition to that the board will separately notify the detailed procedure, preconditions and restrictions through an sales tax general order (STGO) for the smooth operation of subsections (8) and (9) of Section 37A of the Sales Tax Act, FBR added.
The FBR has also separated criminal and civil liability to differentiate between non-compliance and fraudulent activities. Sub-section (1) of section 11E has been substituted where by non-payment of tax through collusion or deliberate act are excluded from its scope, because the provisions of law already exist in this Act under section 37A for initiation of criminal proceedings in such non-payments.
Similarly, the provisions of section 11E shall not be applicable to the extent where proceedings have been initiated under section 37A. This differential between proceedings under section 11E and section 37A is important as the former deals with non-compliance where as latter deals with the fraudulent activities.
Copyright Business Recorder, 2025
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